Gobbling Energy And Wasting It, Too

By Norbert Walter

Published: June 13, 2001

FRANKFURT—
One of the more contentious issues President Bush is discussing with European leaders during his trip this week is his stance on global warming. When Mr. Bush decided to abandon the Kyoto Protocol -- because of its ostensibly unrealistic targets and the pressures it would put on American industry and private households -- he generated a worldwide backlash, particularly among European allies. With good reason: A closer look at the numbers shows that if the economy of the United States operated as efficiently as those of Europe and Japan, American energy consumption and greenhouse emissions would fall dramatically -- to even less than the emission levels envisioned in the Kyoto treaty.

It is well known that the United States consumes more energy than the size of its economy or its share of the world population would suggest. Specifically, the United States produces 22 percent of the world's gross domestic product but uses 25 percent of the world's energy -- and in doing so also accounts for 25 percent of global emissions of carbon dioxide. In contrast, the European Union accounts for 20 percent of world G.D.P. while consuming only 16 percent of the world's energy. Proportionately, the numbers for Japan are similar to Europe's.

What these figures boil down to is that for every dollar's worth of goods and services the United States produces, it consumes 40 percent more energy than other industrialized nations. To be sure, unique factors, like the greater geographic distances in the United States, account for some of the higher energy usage. But according to the United States Energy Information Agency, only about 25 percent of American energy usage is for transportation, so something much more significant than geography is at work here.

The fact of the matter is that if, from an energy policy perspective, the United States economy operated as efficiently as those of Europe and Japan, American energy consumption would fall by about 30 percent. In that case, United States carbon emissions might be expected to fall to the European rate per dollar of G.D.P. -- a 35 percent drop.

If America had achieved European levels of efficiency in the 1990's, it would by now already exceed its Kyoto target for 2012, which was to be 7 percent below its 1990 carbon dioxide emissions. In 1999 emissions would have been about 22 percent below the Kyoto goal.

Moreover, the American appetite for energy will only become more of a problem in the future. No boost in domestic energy production will suffice to keep up with the projected growth in American demand over the next 20 years. The Energy Information Agency estimates that American demand for natural gas will rise by 62 percent, for electricity by 45 percent and for oil by 33 percent over that period. Where will all of this energy come from? American domestic oil production has been falling over the past 30 years, largely because the relatively cheap oil has been pumped. Opening areas like Alaska's Arctic National Wildlife Refuge to oil drilling will provide only a slight -- and temporary -- change in this very long-term trend. Simply put, the oil to support ever-expanding energy use is just not there.

Nor will it be possible for the United States to continue to make up its shortfall with oil from abroad. International supplies of energy will be increasingly scarce as China and India, the two most populous nations, are likely to continue growing at rates of 5 percent to 10 percent a year, with energy consumption expected to increase at substantial rates. Increasing scarcity and rising prices could thus be a real long-term threat to United States economic growth.

For the past decade, the United States has grown faster than any other nation in the G-7 group of industrial countries. As the world's largest economy and the global leader in the economic as well as political realm, it needs to assume leadership on environmental matters, too. It can do so by creating a framework of incentives that will increase the energy efficiency of its economy to match that of Europe or Japan.

This is important not just to ensure the future health of the American economy, but also to send a signal to less developed nations. These countries have little choice but to generate higher levels of pollution for the time being, largely as an inevitable result of their limited access to capital and modern technology. However, this excuse does not apply to the United States, which has a responsibility to demonstrate that a country need not ignore its environmental responsibilities to remain an economic leader. Europe -- and the world -- can only hope that President Bush is serious about making the United States a leader in dealing wisely with energy.